Opposition to QRM proposal picks up steam

Rule would not require 20% down payments, say regulators

The campaign to shoot down a proposal by federal regulators that lenders be required to retain at least 5 percent of the risk on mortgages they securitize when borrowers make down payments of less than 20 percent continues to pick up steam.

A coalition of consumer organizations, civil rights groups, lenders, real estate professionals and insurers coordinated with lawmakers today in bringing pressure to bear on regulators, releasing a white paper and joint letters from members of the House and Senate who have taken issue with the proposal.

Six federal agencies — the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Department of Housing and Urban Development, Securities and Exchange Commission, Federal Housing Finance Agency — are in the process of implementing risk retention policies mandated in the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law last year.

Some provisions of the sweeping legislation were intended to address problems created when loans are bundled into mortgage-backed securities and sold to investors.